Can I Claim Unpaid Tuition As A Loss?

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  • MarinaVanessa
    Family Childcare Home
    • Jan 2010
    • 7211

    Can I Claim Unpaid Tuition As A Loss?

    I had a client leave my DC in January of this year because DCG (in Kindy) needed tutoring and instead of coming to me after-school she began going to an after-school homework help program (I just didn't have the time to spend with her on homework and projects). This client was on child care subsidy (assistance program) and I had already been having problems with delayed payments beginning in September of last year.

    At the end of January I received all of my payment checks for September through December and the stub had a breakdown of the amounts for each month. I was shorted a little over one days worth of tuition for September and one whole week in October. When I called the subsidy program I was told that the one day that I was shorted I would receive a check for and that it had been a mistake on their part.

    As for the missing week well apparently that was because DCG had been on Vacation that week and the parent only wrote "Absent" instead of "Vacation" on their form. In either case even if the client had written "Vacation" on the form the DCG had already taken their 5 days of allotted for vacation earlier in the year and they wouldn't have covered that 2nd week of vacation anyway.

    This client has been a client of mine for a very long time and was the first client I ever had on subsidy so their contract was one of the original contracts that I had which doesn't say anything about how the parent is required to pay for any fees that the program doesn't cover. Asking the ex client for payment is not really an option and neither is taking them to small claims court if they refuse since I wouldn't have a leg to stand on (and it really isn't an option that I would want to take anyway with these clients because they have always been great clients, it was an oversight on my part).

    So that being said:
    Can I claim the week of unpaid tuition that I should have been paid as a loss in my taxes since the contract says that I should be paid and that their tuition fees are based on enrollment not on attendance (but not that the client is responsible for paying for fees that the subsidy program does not cover).

    And if so how do I do that in MMK?
  • frugalmama4
    Daycare.com Member
    • Jan 2012
    • 470

    #2
    Hi there,

    The answer to your question is no, sorry. I'm not sure which one of Tom books itsz in or if I remember him posting about it. But he stated you can not take it as a lost, since you didn't receive the $$ you won't have to report it as income.

    I'm sure Tom will response also.

    Comment

    • TomCopeland
      Business Author/Trainer
      • Jun 2010
      • 3062

      #3
      Deduct tuition owed?

      You can't deduct as a business expense amounts you should have received for caring for children. It's not a bad debt deduction. It means you are reporting as income less than what you should have earned, and therefore you will pay a little less in taxes.
      http://www.tomcopelandblog.com

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